Medical research fund is a tough Budget sell

ScreenHunter_2411 May. 14 07.49

By Leith van Onselen

One of the more peculiar measures to come out of the Federal Budget is the announced development of a $20 billion Medical Research Future Fund, which is to be funded entirely from the $7 co-payment on GP visits, a $5 increase in Pharmaceutical Benefits Scheme prescriptions ($0.80 for concession holders), and savings from medical expenditure.

The fund, which is expected to be “the biggest medical research endowment fund in the world” within six years, will be capital protected, with interest earnings used to fund medical research and discover “cures of the future”.

According to the Budget Papers:

The Fund will facilitate Australia maintaining a world class medical research sector, with access to cutting edge innovation and clinical breakthroughs in our hospitals — the underpinnings of the health system of the future…

This investment, to be managed by the Future Fund Board of Guardians, will help to ensure Australia can continue to advance world leading medical research projects, attract and retain first class researchers and deliver improved health and medical outcomes for all Australians.

Distributions for medical research are expected to reach some $1 billion by 2022-23, effectively doubling the government’s direct medical research funding (see next chart).

ScreenHunter_2412 May. 14 08.44

After thinking about this issue since last night’s Budget speech, I am struggling to formulate a position on whether I support such a Fund.

Hypothecating fuel excise increases back into roads makes perfect sense, and is sellable politically. Most dislike paying more tax, but the pain is far more bearable if the funds are used in ways that are visible and from which we all benefit.

The position is far more blurry when it comes to the Medical Research Future Fund, which offers fewer visible or direct benefits to users of the medical system, with the increased costs instead flowing into what appears to be an obscure slush fund.

As to the merits of establishing the world’s biggest medical research fund, how is it a superior investment to, say, keeping medical services more affordable, investing in increased medical services in regional and remote areas, or any number of other worthwhile initiatives?

While I can acknowledge some wider economic benefits from establishing such a Fund – particularly by boosting the nation’s intellectual property, allowing opportunities for commercialisation, and potentially weaning us off the US pharmaceutical industry (who, let’s face it, are renowned for gouging) – why possibly deprive people of actual medical attention in the process?

The whole policy is a tough sell politically to an electorate that is being asked to pay more for medical services, but will receive few visible benefits in return.

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Comments

  1. Even if you accept it’s a good idea, why does it need to be locked away in a fund rather than allocated and spent from general revenues?

    It’s planned to eventually earn $1 billion per year ($20 billion earning at 5%) which could easily be found in each budget.

    There’s definitely something dodgy about this plan. Who’s going to manage the money and where will it be invested?

      • Haha, my money’s on a chairmanship or directors spot for Tony Shephard as reward for playing the grinch with his CoA.

    • JohnsonMMEMBER

      Not sure if I’m getting the reasoning behind this correctly, but it seems to me that the fund is just a farce and its really about justifying a cash grab.

      If they wanted to fund medical research, they’d take the GP income and put it directly into research. This would give a steady, reliable stream of income to start commencing research immediately.

      Instead they take the GP income and put it in their wallets. They say that when their wallet gets fat enough (10 years from now if I understand) they’ll use the interest from that to fund research.

      i.e. next year and the next and the next and the next and so on they will have revenue but no expenditure.

      It’s all about dressing up a charge to achieve the surplus! Call me sceptical but by 10 years time some politician or another will simply raid the coffers anyway. I.e. I doubt any of it will ever be used for medical research.

      • Rationalize this slush fund with the gutting of the CSIRO.
        Innovation, my arse; cherry picking winners to vested interests most likely. No need to worry the banks will get their share with Costello chairman of the Future Fund.

  2. migtronixMEMBER

    Why don’t we charge $1 for every financial transaction over $1mil and put into the Future Banking FUBAR Fund instead of talking about bail-ins?

  3. Stephen Morris

    Priceless!!

    So what now?

    Australia is going to develop “national champions” in medical research?

    In the same way that it’s trying to create “national champions” in the government-protected finance industry?

    In the same way that it tried for decades to create “national champions” in manufacturing and automobiles??

    Just two days ago we were being told in the most solemn terms:

    “Those who depend heavily on government support will not necessarily receive the same support into the future.”

    Ha!!

    Government support of Mates in the private sector is not coming to an end.

    It’s just a different set of Mates!

    The system of elective government – government by corruptible politicians – is broken beyond repair.

    • migtronixMEMBER

      AMA needs to be on-side when “care rationing” and “hyper-privatisation” starts.

  4. It’s political deceit so they can tell people they will get something, or their grandchildren will. It also runs counter to Liberal ideology and meantime NICTA has been cut loose to fend for itself in the wider market place, not that NICTA needs further assistance per se but why them and why now; and then a medical research fund.

    When politicians crow about the great future and technology it always rings of deception. This will be very hard to sell and require all their hypocrisy and humbug to deliver in the media.

    • casewithscience

      Is Kaplan running NICTA now – they may need help, but probably obtain it all from the Unis anyway.

      In any event, NICTA and the like are a victim of foreign competition. ICT is white hot and benefits from broad industry support. Medical research is different in many ways.

      Hockey made a good decision on this one.

      • flyingfoxMEMBER

        ICT is white hot and benefits from broad industry support

        Not here it doesn’t.

      • casewithscience

        @fox

        Sorry – I was referring to the international competition. IE there is broad industry support for ICT in the US, China, Germany, etc.

    • flyingfoxMEMBER

      @jake and @mig

      The problem with “smart” Australia in the IT/Eng sector is that as a contractor/private sector worker here or overseas you will make atleast twice what you will in R&D here and have a much more secure career. You have to be some sort of masochist (and I would know…) to go down that path. The seriously good ones or ones that go into the FIRE sector can get 4 times as much.

      Everything else just follows from the above.

      • migtronixMEMBER

        Ummmm and government provided incentives have nothing to do with that do they FF?

        Here’s a no brainer — people like me will “benefit” far more from the MRF because where as Australia invests in Medical researchers they don’t invest in the IT/Eng infrastructure such research desperately relies on (despite what you and case say, I know this for a fact!) so guess who can demand the highest price?! Those in most demand with least competition.

        Want to do some serious data crunching? Come see me I’ll send you the fee schedule. Want to do some tweaking to OTS packages? Come see me I’ll send you the fee schedule.

        I will do very well out of this poorly planned proposal and yet I’m the one complaining the loudest. Curious no?

      • flyingfoxMEMBER

        Ummmm and government provided incentives have nothing to do with that do they FF?

        There was ample incentives provided to NICTA, VLSCI, CSIRO etc etc. You just don’t attract talent. Simple as that. Also we don’t have a culture of R&D in that sector here. Should we? Definitely…

        The government or anyone else simply cannot compete for the people based on current or future levels of funding.

        Will it happen with any piddly amount of extra government spending? Nope…..

        Can we afford to change this in the short-medium term? I think not….

        Want to do some serious data crunching? Come see me I’ll send you the fee schedule. Want to do some tweaking to OTS packages? Come see me I’ll send you the fee schedule.

        No, they will just send it to their colleagues overseas and it becomes a collaboration…

      • migtronixMEMBER

        @FF No, they will just send it to their colleagues overseas and it becomes a collaboration…

        Ha ha ha their colleagues overseas, nice. And that collaboration will cost us $7/visit will it? Great outcome.

        Did you know that the same pool of researchers look to the same pool of research tech providers world wide? It won’t be any cheaper o/s…

      • flyingfoxMEMBER

        @mig

        No one is disagreeing with you…you need to tone down the fighting mentality at times.

        Yes we should have a vibrant tech industry but we don’t. This will not change in the near future unless we change the houses and holes mentality. No amount of funding will change this!

        You have said you earn more than 180K…would you half your pay to work in R&D? That’s what researchers get paid, ~100K.

      • migtronixMEMBER

        Sure! After tax it’s not much different and I LOVE research! You may or may not be aware but there’s a cohort of engineers that are really frustrated physics researchers.

      • drsmithyMEMBER

        Not sure if I’m getting the reasoning behind this correctly, but it seems to me that the fund is just a farce and its really about justifying a cash grab.

        It’s got nothing to do with a cash grab.

        It’s a small price to pay for some smoke and mirrors to cover the disassembly of the right’s greatest hate: publicly-funded healthcare.

      • drsmithyMEMBER

        After tax it’s not much different and I LOVE research!

        If 45 grand isn’t that much to you, can you send 10 or 20 my way ? 😀

  5. I’ve been thinking about this too, and can’t reconcile it. It may be a brilliant move to so morally compromise the majority of Australia’s research community (medical) that they cannot defend the cuts to the rest. Wedge politics, is that what its called?

    No self respecting researcher can say research funding will deliver better health outcomes than actual health services. Only on the basis of self-interest can they say this is a good move, so the moral high ground research likes to take is gone.

    Unfortunately, there’s always a researcher there to take the money, research having become an excessively egotistical and selfish activity.

    It could also just be the cult of “innovation” gone crazy.

  6. Strange Economics

    No more age of entitlement for car manufacturers. Age of entitlement for doctors !
    The money would be better used on hospitals using current medical technology on the people in the waiting lists in public hospitals, which was cut.
    But wait, that wouldnt help private hospitals….

  7. I have a self-interest in this field, developing medical devices. However the only area of technology Australia is any good at is in the medical field. The 3 best – CSL, Resmed, Cochlear are our only home-grown technology successes. Trying to put my self-interest aside, is this not a commendable effort to back our one non-mining, non-housing strength which we may be able to build a decent export industry out of ?

    • migtronixMEMBER

      Australia was the forefront of radio and comms tech 40 years ago. Where is it now?

      3 companies do not an industry make.

    • It’s all about execution. Australia has no shortage of successful medical research already; it just hasn’t been commercialised effectively like they do in the US. If executed well, the funds will go to the right parties, and the results will be patented worldwide with royalties flowing to the Australian people. Ergo, the fund must not be corrupted. Somehow I don’t believe that it won’t.

      • casewithscience

        ” it just hasn’t been commercialised effectively like they do in the US. ”

        My role is to get money for research and commercialisation. I can say conclusively that the reason for this is that wealthy people in Australia are less prepared to risk money on medical research and commercialisation than to dig a hole in the ground.

        Simple.

        The US investors (where most cash comes from) are more open to taking a risk.

      • flyingfoxMEMBER

        that wealthy people in Australia are less prepared to risk money on medical research and commercialisation than to dig a hole in the ground.

        Houses and Holes….who needs anything else.

      • @ casewithscience

        Pretty much the same reason Australia hasn’t participated in the tech/internet boom much. Lack of venture capital investors. The capital is drawn to mines and property. Hopefully mining and property fade a bit and investors seek returns elsewhere.

  8. I thought this sounded like a ‘back of the envelope’ idea to sweeten the user-pays message. It also strikes back at any ‘anti-science’ accusations arising from cuts to CSIRO etc.

    Certainly one of the more curious propositions – but hells bells – if it works as intended, great!

    • “I thought this sounded like a ‘back of the envelope’ idea…”

      Agree completely. More (and expensive) policy on the run.

    • BubbleyMEMBER

      Why is the money not going to the CSIRO? This government is supposed to about reducing duplication.

      Lets have a look at who decides where this $20 billion dollar fund will be spent.

      * Chairman – Peter Costello – nuff said.
      *Steven Harker – CEO of Morgan Stanley and other finance groups.
      * Carol Austin – worked for HSBC, Rothschild, BHP, CBA and other finance businesses.
      * Steven Fitzgerald – ex chairman of Goldman Sachs.
      * Susan Doyle – ARIA, Suncorp and IAG and other finance companies.
      * Dr John Mulchay – senior with CBA, CEO of Suncorp and CEO of Lend Lease property investment.
      * John Poynton – Chair of Azure Capital and Crown Perth etc.

      Oh yes, thats right a bunch of Liberal finanace stooges. They are absolutely going to know who to give medical sponsorship too.

      This is just going to be another slush fund for the big boys in the medical industry with no benefit to the average Australian.

      In fact by increasing the costs of going to the doctor and picking up a script this is going to hurt far more Australians than it will benefit.

      $7 is a coffee to me but to someone on the dole or pension it could be the difference between finding out they have operable cancer because they went early or inoperable because they “couldnt afford to go”.

      I am seriously filthy angry and outraged at the way the most vulnerable are being attacked by politicians that are supposed to work for the benefit of the many, not the benefit of the few.

      • Good pickup on the cast and crew – lib division of the laberal party does crony well. How sick is this!

      • Yup, Big Pharma will most likely gain from this new medical research fund. It costs a packet to research and market a new drug – this fund will give them a big boost in both areas.

  9. Hill Billy 55MEMBER

    Thats 2 Sovereign Wealth Funds the Libs have created (with the Future Fund).

    What a pity that Keating didn’t do the same when he created the Super monster back in 1992. What a giant that would be now, and what a wasted opportunity.

    • These are funds that don’t benefit most Australians.

      The future fund is solely for politicians and senior public servant’s outrageous retirement costs.

      This medical future fund is just another slush fund for senior medical researchers and their wealthy private backers.

      Keating squibbed a genuine sovereign wealth fund for sure, but then he squibbed a lot.

  10. They talked about the co payment as a budget saving then stick most of the money into a slush fund . They are opposed to universal health care. It is almost unbelievable the media are letting them get away with it.
    It would seem the Libs really want this country to be have all the worst aspects of the US Heath and education system.

  11. I think this was the best announcement in the Budget.

    Great to see they are actually thinking about the future and positioning us for it.

    • BubbleyMEMBER

      They are not. Its just going to be a slush fund for their medico buddies.

      I doubt any medically relevant studies will come out of it.

  12. While I would prefer research funding to be allocated in a more general manner (e.g. towards the CSIRO) I think this is a bold move. Given that the other MB budget post attracted a number of comments on the lack of ‘vision’ I’m surprised at the number of negative comments here.

    Australia is a world leader in areas such as cancer research. While we are all living longer those additional years come with a host of medical issues. Medical research in to conditions like Alzheimers, Parkinsons, etc has the potential to greatly improve many peoples quality of life. They are also not amenable to research with the normal timespans undertaken by private industries. Seems like a great area for the Government to provide funding.

  13. https://newmatilda.com/2014/05/14/hockeys-mean-budget-full-contradictions

    In announcing the fund, Hockey made the rather grandiose suggestion that it might lead to treatments or even cures for “dementia, Alzheimer’s, heart disease or cancer”. This seems implausible. The US National Cancer Institute alone has a budget of $US5 billion a year and, while there has been some worthwhile progress, the War On Cancer declared by Richard Nixon 40 years ago is far from won. So, in all probability, our money will make a marginal contribution to the continuing global research effort. The direct benefit to Australians will be modest at best.

    • migtronixMEMBER

      Its complete rubbish! Cutting funding to CSIRO which do cross-disciplinary research and could actually connect the dots between environmental factors and health outcomes will ensure its just a medio-legal silo that gets developed.

      • intertubernet

        Yep.

        Which is cheaper? Curing cancer, or understanding what contributes to its occurrence in the first place?

      • Well put Mig, CSIRO is the organisation that should be salvaged after years of degradation, instead we get this political crony claptrap.

        Typical Laberal bullsh&t

  14. Sorry cant agree with the negative sentiment on MB with this on folks

    We need to focus on strong long term value add away from mining especially with aging world

    This is a good move IMO – lets see what they do with it before critiquing

    • Why do we need to keep the aging alive, when they are net welfare recipients?

      Children are net welfare recipients, but they will reverse in due course. Oldies won’t.

    • BubbleyMEMBER

      Yes the concept is sound but implementation sucks.

      Who is going to get this money? Why is the future fund administering it.

      Surely the CSIRO would be a far superior choice but oh they actually understand science, of course they are totally unsuitable to do it.

      /sarc off.

      • CSIRO is not reliable in all area of research, not much helpful when asked for data and anything which would replace it may be better if…..

      • BubbleyMEMBER

        Lori, I personally think that the CSIRO would be a much better choice at deciding who should get the research funding than Peter Costello and a bunch of finance industry stooges (the Future Fund)

  15. Er, isn’t this just picking winners? i.e. picking medical research over other sectors. I didn’t think Liberal govts were supposed to do this type of thing.

  16. The hypocrisy of this medical research fund idea is that the results from it research will be privatized and won’t be available for all Australians in public hospitals, but will enrich the pharmaceuticals and private hospitals/health funds owners. The reason will be that the new medical inventions are too expensive and they cannot be available for most patients. What a wonderful democracy in action – the public funds the research, but its fruits are always privatized. Very sweet…

    • “The hypocrisy of this medical research fund idea is that the results from it research will be privatized and won’t be available for all Australians in public hospitals”

      Soon the government will issue 3 types of Medicare cards; Gold, Silver and Bronze. Gold Medicare card holders will have access to all services. Bronze Medicare card holders will have access to basic services only. Silver Medicare card holders will have access to cutting edge services with co-payments of $10k per year…..

      I haven’t written a new episode of the alternative star wars saga for ages. Perhaps it’s about time to resume……